Bitcoin ‘bank’ loses $1.3m after hack

Teen owner denies heist was an inside job

The teen owner of an Australian ‘bank’ that reported the theft of 4,100 Bitcoins (BTC) now worth $1.4 million Australian dollars (€978,000) has denied accusations that their loss was an inside job.

Using the nickname ‘Tradefortress’ to protect his identity, the unnamed 18-year-old told ABC News that hackers had broken into his site inputs.io on 23 and 26 October and stolen the currency from his digital wallet in two chunks.

The site was no longer able to pay the balances to the BTC owners, a message on the site said although separate reports in the Australian media claim that input.io’s owner had originally planned to reimburse owners using his own Bitcoin holding.

 

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“The attacker compromised the hosting account through compromising e-mail accounts (some very old, and without phone numbers attached, so it was easy to reset). The attacker was able to bypass 2FA [two-factor authentication] due to a flaw on the server host side,” the message continued.

Anyone with an account holding more than one Bitcoin (worth an astonishing $347 each as of 8 November) should e-mail the support address, it said.

“I know this doesn’t mean much, but I’m sorry, and saying that I’m very sad that this happened is an understatement.”

According to the ABC interview, Tradefortress was not planning to report the theft to the police who would in any case struggle to investigate events for a currency that leaves no conventional audit trail.

If confirmed, Bitcoin sceptics will use the loss to point out the currency’s lack of regulation and traceability leaves it wide open to fraud. Bitcoin traders use digital banks to store Bitcoins on the understanding that they are more secure than an individual PC, another assumption that might need reappraisal.

Many see the rise of the currency a gigantic intellectual game designed to test a number of hypotheses, including the possibility that machine-driven currencies with a pre-defined volume (the number of Bitcoins will never exceed 21 million) and no central control represent the future of money.

Equally, a currency needs trust and despite its surging price, Bitcoins lack mainstream acceptance. There is ample evidence that some of its popularity is down to the fact that it offers a way to launder criminal transactions to and from the world of ‘real’ money; the infamous Silk Road criminal market shut down by the FBI last month used Bitcoins as its currency.

Worse, there appears to be theoretical weaknesses in the process for generating the coins that could allow complex forms of fraud to develop. A recent McAfee report predicted trouble for Bitcoins if criminality ends up co-opting the currency for its own uses.

This article originally appeared on Techworld.com

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fieldName); updateCountryCodeInstruction(selectedCountry, fieldName); }); } document.addEventListener('DOMContentLoaded', function() { const smsPhoneFields = document.querySelectorAll('[id^="country-select-"]'); smsPhoneFields.forEach(function(dropdown) { const fieldName = dropdown?.id.replace('country-select-', ''); initializeSmsPhoneDropdown(fieldName); }); });

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